Home Sales Soar!!

US existing home sales jump to 3-year high

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Published: Wednesday, 21 Aug 2013 | 10:00 AM ET

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Existing home sales up 6.5% in July

Wednesday, 21 Aug 2013 | 10:00 AM ET

CNBC’s Hampton Pearson breaks down the latest numbers on housing. CNBC’s Steve Liesman provides insight on how higher interest rates will likely impact the Fed’s decision on tapering. Also, Randy Kroszner explains why he is expecting the Fed to “step down and pause,” not taper.

U.S. home resales rose in July to their highest level in over three years, suggesting a sharp increase in borrowing costs is having only a limited impact on the housing market’s recovery.

The National Association of Realtors said on Wednesday that existing home sales jumped 6.5 percent to an annual rate of 5.39 million units.

Michael Krinke | Getty Images

That was well above analysts’ expectations and marked the fastest pace of sales since November 2009, when a home buyer tax credit was expiring.

Last month, home buyers appeared undeterred by a recent spike in borrowing rates. Indeed, Yun suggested some home buyers might be rushing to make purchases now to avoid further rate increases that are widely expected.

Lenders have increased rates on expectations the U.S. economy will shift into higher gear and that the U.S. Federal Reserve will tighten monetary policy.

Since early May, mortgage rates have risen more than a percentage point for 30-year loans. Last week, the average rate for a 30-year mortgage rose 12 basis points to 4.68 percent, the Mortgage Bankers Association said in a report on Wednesday. .

Economists polled by Reuters had expected sales to increase to a 5.15 million unit pace in July. Sales rose in all four major regions in the country.

The housing market recovery, marked by a surge in prices and dwindling inventories, is helping to shore up the economy by bolstering household finances and supporting consumer spending.

The median price for a previously owned home soared 13.7 percent from a year ago to $213,500. The inventory of unsold homes on the market rose 5.6 percent, leaving the months’ supply unchanged at 5.1.

Other details of the report were also encouraging. Distressed properties – which can depress prices because they typically sell at deep discounts – accounted for only 15 percent of sales last month.

That matched June’s reading, which was the lowest since the realtors group started monitoring them in October 2008.